If you’re looking for a loan with bad credit, you may feel like your choices are more limited. While there are a variety of short term loan options available, it can sometimes be more challenging to take out traditional loans, like bank loans, with a poor credit history.
So where can you get a loan with bad credit? How long will it take to apply? And are short term loans your only option? We’ve explored these questions a little more below, but the short answer is that no matter what your credit score, you should still be able to borrow money when you need to.
Bad Credit Lenders
When it comes to the borrowing options available for people with low credit scores, these will probably be less limited that you might think. The average UK credit score, according to Equifax, is 380 – this is considered ‘fair’, but only just. So most people don’t have a perfect credit score when they take out a loan.
If you’re looking to take out a secured loan, you may need to do some research into which lenders offer such loans to people with bad credit. But with unsecured loans, there are certain types of loan aimed specifically at those with low credit scores. These include payday loans, guarantor loans, and bad credit loans.
- Most people in the UK don’t have a good credit score, so a lot of lenders specialise in bad credit loans
- Even if you have bad credit, you should still be able to take out large secured loans like mortgages, though the interest rates tend to be higher and you may need a larger deposit
- When taking out a bad credit loan, you can save time and increase your chances of borrowing by using a broker service, like My Financial Broker
Can I Take Out a Mortgage With Bad Credit?
While most banks will not consider your application if you have a low credit score, building societies can be more flexible when it comes to taking out a mortgage. There are also a number of mortgage lenders that specialise in bad credit mortgages.
For most people with bad credit, their credit score has been impacted by a difficult life event, such as illness or the breaking down of a relationship. In such times, our physical or mental health tends to suffer, meaning our finances are not a priority. If you are applying for a mortgage in these circumstances, you’re not always given the opportunity to explain the reasons for late payments or any other negative marks on your credit file. But if you approach a specialist lender, or a mortgage broker, they should take these reasons into account and still be able to help you.
It’s a good idea to keep in mind though, that mortgage lenders that can offer a bad credit mortgage often charge higher than average interest rates. They may also require a larger deposit when you buy a property.
Using Brokers To Borrow Bad Credit Loans
When searching for a loan with bad credit, it can not only be a frustrating process, but also time consuming. It’s often difficult to know which lenders are likely to approve your application, so you have to read through lots of different eligibility criteria before applying. That’s why many people choose to use broker services when they need to take out credit. A broker will search through their panel of lenders in order to match you with a lender that should be able to help.
A broker can therefore save you a lot of time in terms of applying for a loan. They can additionally improve your chances of approval. If you were to make a lot of applications in a short period of time, and a hard search was conducted on your credit file each time, this can lower your credit score, and moreover your chances of borrowing. However a broker in most cases will only perform a soft search on your credit report, and will then put you in touch with a lender that is likely to approve your loan application.
My Financial Broker only perform soft credit checks, so applying with us should not impact your credit score in any way. We can help you get the funds you need to cover an unexpected expense, and best of all, our services are completely free!